Penney, J. C. (James Cash), 1875-1971

Biographical notes:

J.C. Penney, merchant and chain store executive, was born James Cash Penney, Jr., in Caldwell County, Missouri, the son of James Cash Penney, Sr., a farmer, minister, and civic leader, and Mary Frances Paxton. Three years after Penney was born, his family (which included twelve children) moved from their farm on 390 acres to Hamilton, a nearby town of 2,000 residents on the Hannibal & St. Joseph Railroad. They continued raising cattle and food on the farm and began participating in Hamilton’s social, business, and political activities. Residing in town also made it easier for the children to attend high school, and Penney’s parents, who graduated from private academies, wanted their children to be well educated. Penney’s formative years were influenced by this combination of farm labor and involvement in town activities, by his family’s religious and political principles, and by his family’s financial difficulties.

After Penney graduated from Hamilton Public High School in 1893 he wanted to attend college, but his parents could not afford the extra expense. He worked on the family farm for two years until his father asked a Hamilton merchant to teach him the dry goods business. J.C. Penney, Sr., who ran unsuccessfully as a Populist candidate for the U.S. Congress in 1894, was pessimistic about his son’s future in farming. The new endeavor was a good match. Soon Penney was the most successful clerk at the J. M. Hale & Bros. store and was saving money to open his own store.

In June 1897, following his doctor’s advice, Penney left Missouri for the drier climate of Colorado. In 1898, he purchased a butcher shop and bakery in Longmont, a small town near Denver. This venture failed after Penney refused to supply liquor to a hotel cook as an inducement for the hotel business. Penney then became a sales clerk at the Golden Rule Store, a Longmont dry goods and clothing store owned by Thomas M. Callahan. Callahan and W. Guy Johnson, his partner in a Golden Rule Store in Wyoming, were impressed by Penney’s hard work. They offered him a position in their Evanston, Wyoming, Golden Rule Store.

Callahan, his relatives, neighbors, and former clerks were the owners of eighteen Golden Rule Stores in the Midwest and Rocky Mountain states. By 1898 they had created a buying syndicate and obtained low prices from suppliers for their large-volume purchases. As a result, Golden Rule Stores were popular for having good quality merchandise that was less expensive than that offered by other merchants. Cash-only sales and odd-cent prices made the stores even more popular. This partnership in profitable stores made them all wealthy, and they were eager to open more stores.

On April 14, 1902, Johnson, Callahan, and Penney became one-third partners in a new Golden Rule Store in Kemmerer, a small coal-mining town about fifty miles north of Evanston in southwestern Wyoming. Penney’s investment was $2,000; he used $500 in savings and borrowed $1,500 from a Hamilton bank. This small outpost of the Golden Rule Store chain became the Mother Store of the present-day nationwide J.C. Penney Company, Inc. First-year sales of almost $29,000 and profits of more than $8,000 proved the store was a success.

Becoming a partner with Johnson and Callahan transformed Penney’s life, and he dreamed of building a chain of stores using one-third partnerships. When his two mentors sold Penney their interests in three Wyoming stores in 1907, he started expanding. With new partners, who were his former sales clerks, Penney opened Golden Rule Stores in Utah and Idaho in 1908.

In 1917, when there were 175 stores, 123 shareholders, and sales of $14 million, Penney became chairman of the board. Earl Corder Sams, who was hired by Penney in 1906, became company president and was responsible for daily operations. Although 1917 has been cited as the date Penney retired from the company, it actually was the year that Penney began the important work of planning for the company’s future growth and continued success.

Penney knew that the company’s future depended on careful selection and training of personnel. The Dynamo, a monthly company magazine first published in April 1917, was designed to educate and motivate associates. Another pioneering personnel effort was a correspondence course that taught associates how to manage a store. This was available to all associates in 1921. Centralized departments, including buying, accounting, transportation, personnel, and advertising also were developed under Penney’s leadership. Through the pages of the Dynamo and on visits to stores, Penney also encouraged managers to participate in local civic activities and to build goodwill for the company.

During the 1920s many private-label brands were developed by the company, whose buyers gave specifications to manufacturers; an in-house merchandise testing laboratory ensured quality control. By the company’s twenty-fifth anniversary in 1927, the J.C. Penney Company, with 892 stores and sales of $151 million, was a household name across America. Although companywide stock replaced the former classified stock plan by 1929, profit-sharing contracts with store managers preserved the original partnership incentive. The company had become the largest dry goods retail chain in the United States, and Penney was popularly known as The Man with a Thousand Partners.

When the Great Depression arrived, the company’s 1,400 stores provided good values to cost-conscious customers. Its well-established conservative fiscal policies and cash-only sales meant it had large cash reserves and no long-term debt. From 1902 to 1958 company merchandising policies did not change. In 1950 Fortune magazine declared the company King of the Soft Goods; one in every four Americans shopped at a J.C. Penney store. Sales of $1 billion in 1951 fulfilled Penney’s 1927 prediction in time for the company’s fiftieth anniversary in 1952.

During these decades Penney’s personal fortunes rose and fell and rose again. He lost an estimated $40 million in the 1930s because his own company stock was used as collateral for loans to philanthropic activities. After stock prices fell, the banks owned almost all his collateral. As chairman of the board of First National Bank of Miami, Penney was also held responsible for its failure in 1930; eventually he paid several million dollars to satisfy depositors’ claims. Until his financial status improved in the 1940s, Penney accepted a salary from the company for the first time since 1909. He continued his routine of traveling tens of thousands of miles each year to visit stores, where he met associates and customers; he also participated in the company’s regional conventions. Penney was chairman of the board of J. C. Penney Company from 1917 to 1946 and again from 1950 to 1958; he was a member of the board of directors from 1913 until his death in 1971 in New York City.

Penney was married three times and had five children. In 1899, he married Berta Alva Hess, with whom he had two sons; she died in 1910. In 1919 he married Mary Hortense Kimball, who bore one son before her death in 1923. In 1926 Penney married Caroline Autenrieth, who was his wife for forty-five years; they had two daughters.

Penney and the Company moved from Salt Lake City, Utah, to New York City in 1914. He had a home in White Plains, New York, from the 1920s to the mid-1950s; in the 1960s he had residences on Park Avenue in Manhattan and in Greens Farms, Connecticut. During the 1920s he had a winter home in Miami Beach, Florida.

Penney’s avocations and philanthropies were farming, education, and religion. From 1921 until his death, he raised purebred dairy cattle on farms in New York and Missouri. In the 1920s the J.C. Penney Foundation supported vocational guidance programs broadcast by radio and underwrote the Christian Herald Magazine . In 1927 he built a model cooperative farm community (which failed after Penney lost his fortune in the Great Depression) and retirement home for ministers and lay workers at Penney Farms in northern Florida, which has survived. In 1954, after his fortune was rebuilt, the James C. Penney Foundation was established. Its focus initially was on supporting religious and educational organizations. From the 1940s until his death, Penney also was a lecturer and an author. His favorite topics were how religious faith had restored his self-confidence after losing his fortune and the importance of applying the Golden Rule principles to practical business matters.

In 1954 Penney received the highest award given by the retailing community, the Tobe Award For Distinguished Contributions to American Retailing, from the National Retail Dry Goods Association. He received the Horatio Alger Award from the American Schools and Colleges Association, was elected to the National Business Hall of Fame sponsored by Junior Achievement, and seventeen colleges and universities awarded him honorary degrees.

James Cash Penney, Jr. was one of America’s greatest merchants and is a continuing role model for achieving business success. His career combined the ideals of the nineteenth-century self-made man with many of the cooperative, economic, and social ideals held by Populists and Progressives. The company’s principles, which evolved from the 1890s Golden Rule Stores partnership plan and merchandising system, were written down in 1913 and included serving the public, expecting only a fair remuneration, and participating in company’s profits. Penney wanted store managers to operate as entrepreneurs, and he established a corporate structure that motivated employees to work hard. A successful store manager received one-third of his store’s profit due to the classified stock system. Managers could also invest their profits in opening new stores and earn more profits. The same opportunities were offered to new employees until the late 1920s; then the profit-sharing contracts were given to store managers. This policy resulted in the company’s rapid expansion to nationwide status between 1913 and 1929. Under Penney’s direction, modern methods of distribution, merchandising, training, and communications were devised to assist the company’s rapid growth.

The company Penney founded in 1902 had sales of almost $18.8 billion in 2005. Although it had changed in many respects, including credit card sales and a mail order catalog, its goals remained the same. Upholding the Penney Idea by selling good quality merchandise at reasonable prices, offering good customer service, and sharing profits with associates are the legacies of James Cash Penney, Jr.

Written by Mary Elizabeth Curry, from J.C. Penney, in American National Biography, Volume 17, Oxford University Press, NY, 1997